U.S. Agencies Are Putting A Lid On Products From Versatile Plant

America's war on drugs is roiling the small but growing industrial hemp
business, throwing the industry's customers into doubt and confusion. It is
also causing something of an international flap.

Caught in the middle is John Roulac, a Sebastopol businessman, who says he
has found himself enmeshed in a Kafkaesque tale of circular logic and
rigid, incomprehensible bureaucracy.

Roulac, who owns and operates a company that imports industrial-grade hemp
seeds and hemp oil, was trying to bring a shipment of hemp seeds south
across the Canadian border in February. His plan was to mix the seed in
chips and candy bars that his company, Nutiva Inc., sells to the
health-food supermarket chains Whole Foods and Wild Oats, among others.

But it just wasn't that easy, as Roulac found out when he became an
unwilling combatant in the drug war.

"I had to make something like 50 phone calls over three days," recalls
Roulac, who finally convinced U.S. Customs officials that the seeds, which
contain faint trace amounts of THC, the psychoactive chemical in marijuana,
couldn't possibly get anyone high, and are a legal product. Besides, the
seeds are sterilized.

After three days of wrangling, Customs cleared the shipment, citing a
recent ruling by the Ninth Circuit Court of Appeals in San Francisco.
Finally, the shelled hemp seeds, grown legally in Canada and shipped by
Kenex Ltd. of Chatham, Ont., were on their way to Sebastopol.

Industrial hemp is a variety of Cannabis sativa, the plant that also
produces marijuana. But industrial hemp comes chiefly from the plant's
stalk and seeds and is not used to get high. Smokable, mind-expanding weed
comes from leaves and buds of different strains of Cannabis sativa.

During the past few years, hemp has become a popular ingredient in a wide
range of products, from bath oils and skin-care products to woven clothing
to muffins, cakes, candy bars and chips. All told, hemp is a $200
million-per-year business in the United States, up from $75 million in
1997, according to the Hemp Industry Association.

However, the industry is growing in fits and starts, and the regulatory
constraints on even seemingly innocuous hemp products have made producers
and importers hopping mad. So far this year, the hemp industry has filed
two lawsuits to loosen regulatory bonds.

In February, the Hemp Industry Association, with Kenex as co- plaintiff,
won a stay of a Drug Enforcement Administration edict that banned edible
hemp products that contain THC. The Ninth Circuit Court of Appeals in San
Francisco issued the stay, and is expected to issue a final ruling by early
next year.

Suit Against U.S. Government

Separately, Kenex, which saw a shipment of its sterilized hemp seed held at
the U.S. border for four months in late 1999 and early 2000, filed its own
lawsuit on Aug. 2 against the U.S. government, charging restraint of trade
in violation of Chapter 11 of the North American Free Trade Agreement. The
suit has gone to a NAFTA panel for arbitration, only the sixth time a case
against the United States has reached arbitration since NAFTA went into
effect in 1994.

Kenex is asking for $20 million in compensation for lost business. As a
private entity, the Canadian company cannot under NAFTA rules overturn DEA
policy. (However, under NAFTA's Chapter 20, a lawsuit by a foreign
government, rather than a corporation, could do that.) A big cash award
would be a setback for the U.S. government's antidrug policy and could
perhaps stimulate growth in the cross-border hemp trade.

And that's exactly what hemp entrepreneurs such as Roulac would like to see
happen. Roulac says that the government's aggressive, "zero- tolerance"
antidrug policies are stifling legitimate trade that has nothing to do with
the multibillion commerce in illicit drugs.

"It's a constant minefield," he said. "The government throws up roadblocks
to this business. They hassle us at the border. When you're a small
company, you need to move your product fast."

George Washington Grew Hemp

Although it is controversial now, industrial hemp has deep roots in
American history and commerce. George Washington grew hemp at Mount Vernon,
his home in Virginia, to make rope, and the plant was a valuable
agricultural crop until the antidrug fervor of the 1930s; marijuana was
outlawed in 1937.

It is illegal to grow hemp in the United States, although cultivating the
plant as a nondrug, agricultural crop is legal in many countries, including
Canada, Britain and China. Hence, American purveyors of industrial hemp
must import all of their supply.

Most imported hemp comes from Canada, which legalized nondrug cultivation
of Cannabis sativa in 1998 and limits the THC content to 0.3 percent.
Because the trade is new, neither the Canadian nor U.S. governments have
records of the monetary value of imported Canadian hemp, according to the
Hemp Industry Association, a trade organization based in Occidental (Sonoma

Under current law, "Some industrial forms of hemp are permitted in this
country," said Will Glaspy, a spokesman for the DEA. "It can be imported to
make rope, clothing, bath oil, any product that's not edible."

But the DEA maintains that edible products containing THC are strictly
forbidden under the Controlled Substances Act of 1970. Hemp seeds and hemp
oil contain less than 1 percent THC, compared with 5 to 15 percent THC in

Hemp Seed Not Narcotic

A consumer would bust a gut and die from the sheer quantity before getting
high from gorging on hemp seed with trace amounts of THC, said David
Bronner, principal of Dr. Bronner's Magic Soaps, based in Escondido (San
Diego County), which uses hemp oil in skin lotions and bath oils.

But zero tolerance means zero tolerance, according to the DEA's Glaspy, who
says "THC is a controlled substance." Glaspy said Congress would have to
amend the Controlled Substances Act before the antidrug agency could
approve edible hemp products containing any THC whatsoever.

That's a problem for the industrial hemp business, which considers edible
hemp products to be a prime growth area, in part because of hemp's alleged
health benefits. Hemp includes useful amounts of essential fatty oils and
vitamin E, according to the hemp trade organization.

But those benefits won't flow to consumers unless hemp, especially edible
products made with seeds and oil, are declared legal once and for all, say
industrial hemp advocates. Unless that happens, there will be more legal
wrangling and more lost business, they say.

Entrepreneur Thwarted

Kenex had been telling investors it expected most of its future business to
be in the United States, whose economy is 10 times the size of Canada's,
according to lawyer Todd Weiler, who is representing the Canadian company.

Weiler, a professor of international law at Canada's University of Windsor,
said border delays and adverse publicity have scared investors and reduced
the number of outlets willing to stock industrial hemp products.

"If you are, say, Whole Foods, are you really going to stock this stuff,
when you have so many choices?" Weiler asked.

A State Department spokesman declined to comment on Kenex's lawsuit, which
will be heard by a three-person NAFTA tribunal in Washington.

The hemp hassle is the latest trade dispute between Canada and the United
States, which have tangled in recent months over imported Canadian softwood
that Washington said is subsidized by Canadian provinces, to the detriment
of American lumber producers.

Edible Products Losing Sales

All this wrangling is taking a toll on the nascent American hemp business.

Roulac said he has lost sales for Nutiva products from supermarkets that
are uncertain about the products' legality. Roulac didn't provide dollar
amounts for any lost sales. Ordinarily, he said, Nutiva does about $35,000
per month in sales.

Herb Leigh, manager of the Whole Foods store in San Francisco, said he sold
off all the store's edible hemp products after Roulac's February run-in at
the border, but has not stocked any more, pending clarification on their
legal status. Leigh said the hemp products were marginal performers in San
Francisco but sold well in some other locations for Whole Foods, based in
Austin, Texas, which operates 130 stores across the nation.

None of the Whole Foods stores will order more edible hemp products pending
government certification of their legality, said Jolyn Warford, a Whole
Foods marketing executive in Emeryville.

But while the industrial-hemp industry is under fire from antidrug
authorities, it has attracted allies in business and politics.

The Body Shop, the British cosmetics and accessories company known for its
embrace of environmentalism, showcases a hemp product line including
products with hemp oil for soothing dry skin.

The state's hemp industry got a boost last week, when Assemblywoman
Virginia Strom-Martin, D-Duncans Mills, introduced a bill that would direct
the University of California to conduct an economic feasibility study of
alternative fibrous crops, including kenaf and industrial hemp.

"This is a new opportunity to revitalize our agriculture industry by
studying developing markets for industrial hemp," said Strom-Martin in a
statement about her bill, AB388. "There are many California manufacturers
that use hemp in their products, but they must import all the hemp they
use. That results in money leaving the state, and possibly the country, for
a product that can and should be grown in California."

Such developments stoke the fires of hope for Roulac, who has written three
books on the use of legal hemp products, and believes hemp has the
potential to rival soybeans as a cash crop.

"I would love to buy hemp from California farmers," he said,. "That way, I
wouldn't have to ship it all the way across Canada. Why can't we grow a
crop that's in practically every industrialized country except America?"

Hemp As An Industrial Crop

Although it is illegal to grow industrial hemp in the United States without
a permit from the Drug Enforcement Administration, it is legal to import
hemp to make numerous products. Here are some of the plant's diverse uses:

Uses For The Leaves

Animal bedding, mulch and mushroom compost

Uses For Seeds/Hemp Oil

Food: Granola, protein-rich flour, salad oil, margarine, food supplements
Health products: Soap, shampoo, bath gels and cosmetics Other uses:
Birdseed, oil paints, solvents, varnish, chain saw lubricants, printing
inks, putty and fuel

Uses For Hemp Stalk

Clothing: Fabrics, handbags, denim, diapers, socks, shoes and fine textiles
from the cottonized fibers Other textile uses: Twine, rope, nets, canvas
bags, tarps and carpets Paper: Printing paper, fine and specialty papers,
technical filter paper, newsprint, cardboard and packaging products
Building materials: Fiberboard, insulation material, fiberglass substitute,
concrete blocks, stucco and mortar Industrial products: agro-fiber
composites, compression-molded parts, brake/clutch linings and caulking

Hemp And Marijuana

Both are varieties of the species Cannabis sativa. Delta-9
tetrahydrocannabinol (THC), a mind-altering chemical, makes up 5 to 20
percent of marijuana, but less than 1 percent of hemp.

Source: Nova Institute, Courtesy of Hemp Horizons by John Roulac (Chelsea
Green Publishing)

Pubdate: Sun, 25 Aug 2002
Source: San Francisco Chronicle (CA)
Copyright: 2002 Hearst Communications Inc.
Contact: letters@sfchronicle.com
Website: http://www.sfgate.com/chronicle/
Details: http://www.mapinc.org/media/388
Author: David Armstrong
Bookmark: http://www.mapinc.org/hemp.htm (Hemp)